SMT. BHOJ BHARTI,GHAZIABAD vs. ITO, GHAZIABAD

Date of Hearing 16.03.2016 Date of Pronouncement 05.05.2016 ORDER

PER DIVA SINGH, JM

1. “For that the Hon’ble CIT(Appeals)-Ghaziabad erred on facts as well as in law in passing the impugned order u/s 250 of the Income Tax Act, 1961.

2. For that the Hon’ble CIT(Appeals)-Ghaziabad erred on facts as well as in law in upholding the addition of Rs.9,21,100/- on account of cash payment towards the purchase of the property. 3. For that the Hon’ble CIT(Appeals)-Ghaziabad erred on facts as well as in law in enhancing the assessee’s income by Rs.5,00,000/- as unaccounted Investment. 4. For that the Hon’ble CIT(Appeals)-Ghaziabad erred on facts as well as in law in upholding the penalty proceedings against the assessee u/s 271(1)(c) despite that no case of concealment/submission of inaccurate particulars of income has been made out against the assessee. 5. The assessee craves leave to put, alter and/or amend the ground(s) at the time of hearing.”

I.T.A .No.-338/Del/2016

I.T.A .No.-338/Del/2016 assessee’s submissions confronted the assessee that this would be a violation of section 269SS of the Income Tax Act, 1961. In view of this confusion, the assessee had surrendered the amount. Similarly the AO was also faulted for relying on the document demonstrating the intention of the party to transfer the said property to the Varshney Bhawan Trust for concluding that it was worth Rs.37 lakhs and the claim that it was purchased for Rs. 32 lakhs was not accepted leading to the addition of Rs.5 lakhs. The argument that the assessee was able to bargain and convince to purchase at a lesser price was not accepted by the CIT(A).

However, we are equally clear that in the performance of this duty, he is to ensure that what is to be taxed under the income tax is the taxable income of the assessee and not the mistakes committed by the assessee in explaining its income.

5.1. In the facts of the present case, we find that the assessee made the plea before the CIT(A) that the surrender made by the assessee before the AO was not 3 of 6

I.T.A .No.-338/Del/2016 only on incorrect facts but was also on account of the fact that the AO informed the assessee that the acceptance of a loan from her son would lay her open to violation of section 269SS and also expose her son to violations under the Act. The said advise was based on incorrect facts is a plea which has been raised and has not been examined. The plea so made before the Ld. CIT(A) should have been considered. We find that the plea ultimately made that the said amount was not a loan from her son to her but infact was an amount transferred by way of an Account payee cheque by the Varshney Bhawan Trust has not been examined. We also find that as per the submissions made before the CIT(A) found extracted in the order at page 5 para 7, Mr. Anand Kumar the seller was persuaded by the trustees to agree to sell the plot at Rs.32 lacs as the Trust could not afford Rs.37 lacs. Thus merely because an evidence in support of the intention expressed to ultimately transfer the property in favour of the Trust as and when the Trust was able to meet the costs does not ipsi dixit lead to the conclusion that the property was actually purchased at the price of Rs.37 lacs as earlier contemplated. The evidence that the transaction ultimately took place at the price of Rs. 32 lacs needs to be examined on the basis of supporting evidence on record. The claim cannot be outrightly rejected without assailing the veracity of the evidences relied upon. It is seen that the assessee in support of its claim submitted a sworn affidavit of Mr. Anand Kumar, the seller, confirming that there was no cash transaction at all in his case.

Apart from that, reliance was also placed on the affidavit of the General Secretary of Sri Varshney Bhawan Trust, Ghaziabad to support the claim that the said plot was purchased at a price of Rs.32 lacs which claim too needs to be examined.

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I.T.A .No.-338/Del/2016 Accordingly in the peculiar facts and circumstances of the case, we are of the view that in the facts of the present case justice has not been done. The duty of the Assessing Officer/ the tax administration is not only to ensure collection of maximum revenue for the state but it is also the onerous responsibility and the duty to ensure that the tax so collected is actually due to the State. The tax collections based on the mistakes and ignorances of the taxpayer cannot be upheld as a substantive legal principle. Such an exercise strikes at the very root of the tax collection administration which is presumed to be just and fair. The tax administration is presumed to enforce their powers applying the Rule of law alongwith its ever growing concrete connotations and not just applying these in a pre-functory manner by paying lip service to these as abstract principles of regular power. The power comes married to duty and responsibility presuming that tax determination is done as per law, facts and evidences through thoughtful rulings while determining and deciding every tax issue being litigated in a just and fair manner at all times.

5.2. Accordingly in the peculiar facts and circumstances of the case, we are of the view that the issue should be restored back. Since the evidences are fresh evidences after hearing the Ld. Sr.DR who states that the correct authority in the circumstances would be the AO and not the CIT(A), we remand the issue to the file of the Assessing Officer with a direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The assessee is given liberty to place necessary evidences in support of its claim namely evidence by way of which the claim that the said amount of Rs. 11 lacs odd was received by 5 of 6

I.T.A .No.-338/Del/2016 way of an account payee cheque handed over to Varshney Bhavan Trust, Ghaziabad for arranging the execution of the deed. Similarly confirmation of Mr. Anand Kumar from whom the said plot was purchased is also relevant evidence which can be relied upon or any other evidence which the AO considers it fit and appropriate.

The order is pronounced in the open court on 05 of May, 2016.